Ad Spend in China Rose 14% to $87.81 Billion in 2009

SHANGHAI (AdAgeChina.com) -- Ad spending in China rose to $87.81 billion in 2009, up 14% from the previous year, according to data released this week by Nielsen Co.

During 2008, by comparison, total media expenditure grew 17%, largely due to marketing related to the 2008 Olympic Games in Beijing.

Ad spending in TV, which accounts for the lion's share of investment in China's media market, rose 14%, while newspaper spending grew 18% and magazines, by15%.

"Clearly we saw a rebound. The first quarter of 2009 was the weakest we've seen in a while with single digit growth, but the next three quarters were so strong that we had to double and triple check the data to make sure the numbers were right. It was definitely a surprise to end the year with so much growth," said Jed Meyer in Shanghai, managing director of media services for Nielsen in Greater China.

Healthy drinks and innovation drove beverage spending
By category, beverages "jump out with 57% growth," Mr. Meyer added. "Drinks are a low-cost item, so even in a time of economic uncertainty, people can still enjoy a beverage that costs three or five RMB (44 to 74 cents)."

Companies also invested in innovation, creating new drinks for the Chinese market such as Coca-Cola Co.'s Minute Maid Milk Pulpy, he added. "They can't keep up with the demand. It's a very localized drink which didn't come from Atlanta and they've done really well with it."

Another fast-growing category was electrical appliances, because consumers were offered tax incentives for big purchases. Marketers invested heavily late in the year, when spending tends to rise before an annual week-long holiday in October and Chinese New Year, which falls in mid-February this year.

Finance spending was weak
Despite overall growth, there were weak areas. Spending on financial services fell 2% "because of the global economic crisis and overall concerns about the insurance and credit cards sub-categories," Mr. Meyer said. "But spending started to pick up in the fourth quarter, so maybe that category is starting to come back too."

Procter & Gamble continued its reign as China's largest advertiser in 2009, although its spending fell 11%, a figure that Mr. Meyer warned could be easily misinterpreted.

"P&G is still marketing heavily in China and spending money, but more in unmeasured areas like online media and events. They are reallocating those dollars in other areas as China's digital market becomes more sophisticated.""

L'Oreal increased spending in China by 56%, to support new products launches such as mass-market hair care products.

﻿"Based on our consumer confidence data, we see a stronger year ahead and 2010 should be a good year to invest in the market, especially if advertisers held back in 2009," Mr. Meyer said.

In terms of advertising spend, with the power of social media, high penetration of smart phones and growth of digital TV, "it is critical to redefine your definition of media and allocate across the right mix of media. Innovative approaches will be a critical element of advertising investment in the new year."